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Teacher Home Loan Options

This page updated and accurate as of March 10, 2026 USDA MTG HUB

Teachers have some great government mortgage options available to them in 2026. Many teachers need a home mortgage solution that requires little to NO down payment. Let’s take a look at some of the best Teacher home loan options available in 2026.

USDA Rural Housing Mortgage – 100% Financing, Government backed.

You see “USDA” and the first thing you think is farms and ranches – or maybe even beef inspections? Many Teachers are still unaware that USDA & Rural Development offer regular home mortgages. The USDA 502 Guaranteed loan is a program designed to help rural communities expand by making homes in these areas affordable through easy credit requirements. USDA is currently the only 100 percent no money down mortgage available in the U.S. today (unless you have military VA benefits) The program is perfect for public service workers like school Teachers, Firefighters, EMT, Police who may have limited money saved for a down payment.

Here are some of the many benefits that this program offers to teachers:

USDA mortgages require no money down up to 101 percent financing ( One-time USDA guarantee Fee of 1.0% included in loan amount)
No time consuming requirements to get approved. No special class or education needed. Get pre-approved and out searching for a home all in the same day.
USDA are secure with low 30-year fix interest rates.
The home you decide to purchase doesn’t need to meet any “special requirements” as the home can be a short-sale, foreclosure, bank owned, by owner, or a regular sale. The home should only be located in defined USDA approved area (according to the map here) and be in good move in condition.
In comparison to FHA, USDA has much a lower monthly mortgage insurance – PMI cost.
USDA closing cost can be rolled into the loan in some cases or paid by the seller of the home you choose.
There are no maximum home purchase loan limits with USDA loans. Buyers get approved based on their total income/debt.
No assets as collateral are required to qualify for USDA loan
You can qualify for a USDA loan with a minimum credit score of 620
USDA does have household income limits, depending on the county and size of the household. Contact us to discuss in detail – applicants can submit the Quick Contact Form on this page.

FHA Mortgage – 96.5% Financing.

The standard Government backed FHA home loan is very similar to the USDA program above. However, this program does require a small 3.5% down payment. The down payment can be a gift, and come from a family member.

The big difference between the FHA and USDA mortgage is the property you purchase with FHA is NOT required to be in a designated approved area.
FHA also does not have income caps for the household.
Like USDA above, the FHA loan permits the home seller to pay the buyers closing costs.
FHA also permits co-signers – even if they are not going to occupy the home.
Secure fixed interest rates and no prepayment penalty. Move or pay off your loan anytime.
FHA loans can close in as little as three weeks.

Good Neighbor Next Door, FHA Niche Program

The Good Neighbor Next Door Loan is the HUD-FHA (Federal Housing Administration) niche program. It is a program that is focused on revitalizing communities, with the help of public service professionals, like teachers, and in return, helping them become homeowners.

Here’s how this program works:

Eligible single-family homes located in targeted communities (revitalization areas) are listed for sale through this program. These properties are available for purchase for 7 days.
To participate, all you need to do is submit your interest for a specific home. If more than two people submit an offer for the same home; the selection is made by random lottery.
In addition to this, to qualify you must meet all the requirements such as:
You can apply for the Good Neighbor Next Door program if you are employed as a full-time teacher by a state accredited public or private school that offers direct services to students from pre-kindergarten to 12^th grade
The school where you are employed at; must serve students from the area where your new home that you’re planning to purchase, is located.
HUD offers big discounts from the listed price of the home (often times 50%) however, the teacher (the borrower) must commit to live in the property for 3 years after purchase and contribute to the community’s revitalization

FHA HUD $100 Dollar Down Program

This program offers $100 down payment on select HUD owned homes. Buyers can learn more about the HUD 100 dollar down loan here.

So, if you are a teacher with limited finances, don’t let this stop you from realizing your dream of home-ownership. Interest rates are still attractive and buyers can often own a home for less than their current rent payments. The best part is this can be done with little to no money out of pocket.

USDA Mortgage Hub serves Teachers across the nation. Teachers that have questions or what to learn more about getting pre-approved can submit the Quick Contact Form on this page.

97% Conventional Loan Financing

This page updated and accurate as of March 10, 2026 USDA MTG HUB

Years ago during the real estate boom, 97% Conventional loan financing was readily available for first time home buyers and the programs weren’t so exclusive. Many mortgage lenders were even offering 100% financing mortgages which worked quite well at the time. Then things started to change.

The mortgage industry experienced a downturn in foreclosures and tougher lending regulations seemed to end most of these mortgage programs. But things changing in 2026 as the housing markets continue to recover.

97% Conventional Mortgage Financing has made a recent comeback by Fannie Mae, through My Community Mortgage product and for a standard non-MCM Conventional Loan Product. These programs are meant to help first-time homebuyers who may not have the resources for a larger down payment, the program allows them to receive loans requiring little down payment. It is also great for homeowners whose homes have lost value since purchase but who are otherwise ineligible for the Home Affordable Refinance Program (HARP).

This program makes mortgages more accessible, sustainable and affordable. Fannie Mae offers guidelines and tools that enhance the benefits of 97% Conventional Mortgage Financing. The flexibilities inherent to the program are what distinguish it from other conventional mortgage financing options in the market.

97% Conventional Mortgage Highlights

The program provides a Maximum loan to value (LTV), Combined Loan to Value (CLTV), and High or Home Equity Combined Loan to Value (HCLTV) is 97%.
Manufactured homes are not eligible for 97% LTV loans.
Cash gifts may be used for down payments and reserves.
It limits the upfront monthly costs of mortgages.
It supports the long-term success of buyers.
Private Mortgage Insurance (PMI) cancels when the loan reaches 80% LTV.

97% Conventional LTV Home Buying Requirements

Only 30-year fixed rate mortgages are allowed.
Only available for low to moderate income families.
The program requires a minimum of 3% down payment.
May require homebuyer education prior to loan closings.
Borrowers are required to pay Private Mortgage Insurance (PMI).
At least one of the borrowers on the loan must be a first time home buyer.
The loan must be used for a 1 unit primary residence (including Condos and PUDs).
No second home or investment type purchases.
Applicants must score must be greater than 640 to qualify.

Other than these features, 97% conventional mortgage financing is quite similar to other conventional mortgage types. But because 97 % conventional mortgage insurance goes away at 80% LTV, it can become a better value over time, especially if you have high credit scores. The higher your credit scores, the cheaper 97% conventional mortgage funding will be. You can check your eligibility for the 97% conventional program and buy your dream home with a down payment of just 3%.

Questions about getting pre approved? Please connect with us today by calling Ph: 800-743-7556 or just fill out the Quick Contact form on this page.

2026 FHA Home Loan Benefits

This page updated and accurate as of March 10, 2026 USDA MTG HUB

The FHA loan program has remained a popular mortgage financing source for many home buyers across the nation. Many home buyers need home loan options that offer min down payment like the FHA program. In addition to the low 3.5% down payment requirement, FHA recently announced the monthly mortgage insurance is going down, making the home loan even more affordable for new buyers and current FHA mortgage holders.

In addition to a low 3.5% down payment, easy credit qualifying requirements, and backing by the federal government – FHA mortgages are an attractive option to many borrowers in the U.S. Donald Myers, FHA loan specialist, says that FHA loans will always play a big role in the housing market whether their costs rise or fall. Most buyers (especially first-time buyers) cannot qualify for bank conventional loans that require large 10% or 20% down payments.

Below we will look at all the 2026 FHA Home Loan Benefits:

Relax credit score and down payment requirements:

The FHA requirements for credit scores and down payments are far lower than for conventional loans. Borrowers can technically qualify for an FHA loan with credit scores of at least 580 credit score and a down payment of just 3.5 percent – according to FHA. While an FHA-backed mortgage with a credit FICO of 580 is “available” to borrowers, many lenders and banks will add their own in-house “overlays” on top of these minimum credit requirements.

Loans with the lowest credit scores tend to default at a much higher rate, and mortgage companies are afraid that if they issue too many loans that later fail, HUD will no longer allow them to write FHA-backed mortgages. Therefore, many borrowers will find they need to have credit scores of at least 620 to qualify for the max 96.5% financing.

FHA mortgage interest rates:

FHA loan rates are typically the lowest 30 / 15 year fixed rates available and lower than conforming loans. FHA Borrowers with credit scores of 680 will often qualify for the same interest rate as conventional borrowers with a score of 720 +. In addition, they will not be required to put as much money down.

FHA mortgage insurance premiums:

The biggest downside of FHA loans has long been the costs associated with the upfront and annual mortgage insurance premiums. However, since the interest rates on FHA loans are generally lower when compared to conventional, it oftentimes offsets the additional costs.

The upfront mortgage insurance premium (MIP) is 1.75 percent of the loan amount. That is $3,500 on a $200,000 mortgage. That cost is added to the principal balance of your loan. So your loan amount is actually $203,500.

Just to clear up any confusion, the annual mortgage insurance is actually the monthly insurance (PMI) that is added to your monthly payment. This is the monthly PMI rate, not the one-time funding fee of 1.75%. The new mortgage insurance reduction is a huge saving. On a $200,000 loan, the annual premium of 1.35 percent would cost borrowers $2,700. But with a premium of 0.85 percent, borrowers will only pay $1,700 for the same loan amount.

The lower annual rate does not apply to those applicants who are taking out 15-year fixed mortgage terms, these will remain the same. Borrowers can read all about the latest FHA mortgage insurance calculator 2026 here. Please also see the chart below – this compares the new and old FHA monthly mortgage insurance rates, the monthly saving is pretty good!

FHA closing costs:

FHA still permits home sellers to pay up to 6% of the loan amount to cover buyers’ closing costs. In conventional loans, sellers can only pay up to 3% in most cases. So this allows the FHA home buyer to put less money into the transaction. In some cases, a borrower can just pay the down payment, and have the seller pay all closing costs. Most first-time buyers can come up with enough money for a down payment, but then they have nothing else. So allowing the home seller to pay the tab on closing costs is a big help for many.

Secure backing by the U.S. government:

FHA loans are backed by the US government – Federal Housing Administration. The program offers safe secure fixed-rate terms with no pre-payment ( early payoff) penalties.

*Note, Florida home buyers have a special opportunity with the Florida Hometown Heroes Program. This state-sponsored down payment assistance program offers 5% (up to $35,000) of the home purchase price to assist with the buyer’s down payment, closing costs, and loan principle reduction.

Please call or submit the Quick Contact Form to learn more about any of the programs available.

First Time Buyer Programs Colorado

This page updated and accurate as of March 10, 2026 USDA MTG HUB

First Time Buyer Programs Colorado: First time home buyers in CO has some great home financing options available in 2026. In the post below we talk about some of the popular mortgage programs like USDA, FHA, VA and the benefits of each.

100% USDA RD Home Loan

The complete name of the loan is the Rural Development Guaranteed Housing Loan Program, or RD for short. It is supported by the United States Department of Agriculture and offered through approved USDA lenders and banks. The program is only available on rural properties in select locations around Colorado. Don’t let the word “rural” fool you, many popular suburban locations just outside of Aurora, Castle Rock, Greeley, Fort Collins, etc are still eligible for USDA financing. You can check eligible locations and address here.

USDA Loan Benefits:

USDA is one of the only programs left that permits 100% financing – no down payment required
Great for Colorado Teachers, Fire Fighters, Police, etc. Flexibility for first time home buyers
USDA allows the home sellers to pay buyers closing costs.
Secure 30 year fix terms at low interest rates.
No restrictions on when you can move or sell your home, etc.
Buyers are not required to be first time home buyers.
No special class, down payment assistance programs needed. Applicants can be approved in minutes.
Any house that is in good repair and located in a USDA eligible location is ok, regardless of the home seller.
No loan amount limits with USDA, buyers qualify based on their debt to income.
Easy USDA refinance options available for home owners that currently have a USDA loan.

USDA Loan Requirements:

Buyers must have a min 620 credit score to be approved.
Solid work history for the past 2 years – no unexplained gaps in employment.
Household income must be below the county limit. Read more about household income limits here.
The home must be located in a USDA approved locations, see the map link above.
Mobile homes, rehab homes, land loan, lot loans, build on your own site financing NOT permitted. Home must be existing single family, approved condo or townhome in good repair.
Primary residence homes only.
Read more about USDA purchase FAQ’s here.

VA Home Loans

The VA loan program is a great benefit to active military and vets in Colorado. VA and USDA are the only two remaining 100% financing program available today. The program has been offered since 1944 and has opened up the doors to home ownership to many veterans and their families. The VA loan is one of the government loan programs that has less restrictions, and easy to qualify for.

The loan can be made without a down payment and has lower fixed interest than other types. The VA application and qualification process is similar to other types of government loans like FHA and USDA. Any interested former military must first apply for a Certificate of Eligibility through the VA, pick out the perfect house and sign a purchase agreement. Don’t have a COE, please contact us below for assistance. Once this is complete the appraisal, home inspection and underwriting process can start.

So exactly who is eligible for VA loans? Colorado vets who have served on active duty and who have been discharged, with the exception of a dishonorable discharge, can apply. A veteran, prior to applying, must have served 90 days during wartime or 181 continuous days during peacetime. Additionally, for veterans enlisted after September 7, 1980 or who began service after October 16, 1981, there’s a two-year requirement.

National guards and reservists have a six-year requirement within certain criteria. Surviving spouses have their own set of eligibility requirements. Also keep in mind VA loan benefits can be used more than once.

VA Loan Benefits:

100% financing, $0 down payment.
Lowest fixed interest rates of any mortgage program.
NO monthly mortgage insurance – or “PMI” as it’s more commonly referred to. This is a huge benefit for military buyers.
Any single family home, town home, approved condo is eligible. Must meet basic HUD standards in regards to condition. Pretty much all government loan programs follow this same protocol.
Seller can pay certain allowable closing costs on behalf of the home buyer.

VA Loan Requirements:

Must be eligible past or present military to be approved.
620 credit score required.
Loan amount limits generally follow basic conforming loan limits of $417,000
Stable employment with 2 year history.
Mobile / Manufactured homes not permitted.

Need more assistance on VA home loans? Please visit VA Mortgage Hub here.

FHA Home Loans

The FHA mortgage is a housing loan that is insured by the Federal Housing Administration (FHA) and offered through approved lenders and banks. Essentially, the federal government insures loans for FHA-approved lenders in order to reduce their risk of loss if a borrower defaults on their mortgage payments.

The FHA program was created in response to the economic downturn that happened in 1930s; to provide mortgage lenders with adequate insurance; and to help stimulate the housing market by making loans accessible and affordable. Nowadays, FHA loans are very popular, especially with first-time home buyers in major metro areas like Denver, Colorado Springs, Pueblo, etc.

Typically an FHA loan is one of the easiest types of mortgage loans to qualify for in CO because it requires a low down payment and you can have less-than-perfect credit. An FHA down payment of 3.5% is required. Borrowers who cannot afford a traditional conventional down payment of 20 percent or can’t get approved for private mortgage insurance should look into whether an FHA loan is the best option for their personal scenario.

FHA Loan Benefits:

Up to 96.5% financing.
Low secure fixed rates – 15 year, 30 year, etc.
Sellers concessions permitted for closing costs.
No restrictions on home location like USDA.
No household income restrictions like USDA.
Streamline refinance options available for those home owners that currently have a FHA loan.

FHA Mortgage Requirements:

Must have a steady employment history for the past two years.
Must have a valid social security number, and have lawful residency in the U.S.
Must make a minimum down payment of 3.5 percent. The money can be gifted by a family member.
New FHA loans are only available for primary residence only.
Minimum credit score of 620 for maximum financing with a minimum down payment of 3.5 percent.
Minimum credit score of 600 for maximum LTV of 90 percent with a minimum down payment of 10 percent. FHA lenders will use a case-by-case basis to determine an applicants’ credit worthiness.
Typically you must be 4 years out of bankruptcy and have re-established good credit.
FHA does have loan amount limits depending on the County. See below.

For more detailed FHA information, please visit FHA Mortgage Source here.

USDA Mortgage Hub serves home buyers nationally 7 days a week. Please contact us with questions at ph: 800-743-7556 or just submit the Quick Contact form on this page.

USDA 502 Guaranteed or Direct Loan?

This page updated and accurate as of March 10, 2026 USDA MTG HUB

Home buyers often ask us “What’s the difference between the USDA 502 Guaranteed or Direct loan? ” Most buyers are unaware that USDA Rural Housing offers two different home loan programs for home buyers. What program is right for you all depends on your household income.

In short, the USDA Direct loan is set aside for home buyers that have low to very low income. These loans are processed directly by the USDA only, as the name “direct” implies. The USDA 502 Guaranteed loan is geared towards moderate income borrowers, this program makes up the large majority of USDA loans in the U.S. today. This program is only offered through USDA approved lenders and mortgage companies, not directly through the USDA.

USDA Direct Loan Basics:
Also known as the Section 502 Direct Loan Program, USDA Direct Housing Loan is less common than USDA Guarantee loan program. The Direct loan is only available for low and very low income households to obtain home ownership, as defined by the USDA. Very low income is defined as below 50 percent of the area median income (AMI); low income is between 50 and 80 percent of AMI; moderate income is 80 to 100 percent of AMI. To apply for a USDA direct loan, applicants must contact their local USDA office below.

Who may apply for the USDA Direct loan?
A number of factors are considered when determining an applicant’s eligibility for Single Family Direct Home Loans. At a minimum, applicants interested in obtaining a direct loan must have an adjusted income that is at or below the applicable low-income limit for the area where they wish to buy a house and they must demonstrate a willingness and ability to repay debt.

Applicants must:

Be without decent, safe and sanitary housing
Be unable to obtain a loan from other resources on terms and conditions that can reasonably be expected to meet
Agree to occupy the property as your primary residence
Have the legal capacity to incur a loan obligation
Meet citizenship or eligible non-citizen requirements
Not be suspended or debarred from participation in federal programs

Properties financed with direct loan funds must:

Generally be 1,800 square feet or less
Not have market value in excess of the applicable area loan limit
Not have in-ground swimming pools (pools are permitted under the Guaranteed program)
Not be designed for income producing activities

If you have questions about applying for a USDA direct loan, please contact the USDA here.

USDA 502 Guaranteed Program Basics ( offered exclusively by approved lenders and banks)
This program assists approved lenders in providing moderate-income households the opportunity to own adequate, modest, decent, safe and sanitary dwellings as their primary residence in eligible rural areas. USDA Guaranteed loans are the most popular type of USDA loan and allow for higher income limits and 100% financing for home purchases.

USDA Guaranteed Loan applicants may have an income of up to 115% of the median household income for the area. All USDA Guaranteed loans carry 30 year terms and are set fixed interest rates.

Who may apply for the USDA 502 Guaranteed program?

Applicants must:

Meet income-eligibility, please see the 2026 USDA loan income limits.
Agree to personally occupy the dwelling as their primary residence
Be a U.S. Citizen, U.S. non-citizen national or Qualified Alien
Have the legal capacity to incur the loan obligation
Have not been suspended or debarred from participation in federal programs
Demonstrate the willingness to meet credit obligations in a timely manner (620 credit score required)
Purchase a property that meets all program criteria – approved USDA location.

What are some of benefits of a USDA loan?

USDA Guaranteed Loans require no down payment – 100% financing.
There are no prepayment penalties for USDA Rural Home Loans.
The home seller can pay the buyers USDA closing costs.
A USDA Rural Development Home Loan has lower monthly mortgage insurance when compared to other loan options.
USDA RD Loans are offered at terms of 30 years with a fixed interest rate
No special class or schooling requirements to apply. Home buyers can get approved in minutes.
A USDA Rural Development mortgage is available all rural areas of the country, provided a market exists for the property and the home meets HUD’s minimum property standards.
A USDA Rural Housing loan can be used to purchase a new or existing one family home in rural areas – regardless of who the home seller is.

Have questions about applying for a USDA Guaranteed loan? Please submit the Quick Contact Form on this page or call us.

First Time Home Buyer Help

This page updated and accurate as of March 10, 2026 USDA MTG HUB

First time buyers often need a lot of assistance since the home buying process is new, and a sometimes frightening to them. It’s easy to make quick (and often bad) decisions when you are purchasing a home for the first-time. In order to make sure things go smoothly, there are some things all first time home owners should know in 2026:

Get Your Mortgage Pre Approval Letter Before Looking At Houses

A most important part of buying a home is knowing if you can get approved for a financing, and more importantly…how much you can afford to purchase. Unless you are paying cash for the house, you need to understand the different mortgage financing available, and what loan option best fits your needs.

100% USDA mortgage, FHA loan, VA loan, Conventional loan, etc. Required down payment, loan terms, money needed for closing costs – these are all important things first time buyers need to know in advance. Furthermore, home sellers and realtors will often times require buyers to get pre approved before considering any offers. Contact us 7 days a week to discuss all your loan options.

New Loans Before Home Buying

Taking on new debt like a auto loan, etc is a quick way to disqualify yourself for a home purchase. Your debt to income ratios play an important role on how much you get pre approved for. Thinking about adding a new $500 per month car loan? it could decrease your home approval amount by more than $60,000. Seems mind boggling doesn’t it? Buyers are often surprised how big the impact of debt can be on their home loan approval amount. If you need to make a large purchase like a auto, hold off until after your home purchase is closed.

Find A Good Realtor

Like your mortgage lender, your realtor is equally as important. Make sure you are working with a proficient realtor local to your neighborhood. Realtors play a big role in the contract and closing costs negotiations. The best part is a realtor doesn’t cost the buyer anything – so take advantage. Please reach out to us if you need a Realtor recommendation in your area, we would be happy to help.

Skipping Home Inspection

Some first time buyers may want to cut down on costs by NOT getting their home inspected. Most home loan programs actually don’t require this unless serious health or safety issues are discovered by the appraiser. While skipping the home inspection may help lower some costs in the beginning, it’s a very bad idea that could come back to haunt you later.

Getting a home inspected right before or after your purchase gives you a full overview of homes overall condition, all the work that has to be done on the property. The costs of a home inspection for most entry level homes in the U.S is about $500-$650 – small price to may when you are talking about the biggest investment of your life.

I Read It On The Internet – Must Be True?

Online websites are generally a good source when you are looking for basic information, but often, this is not all the information you should have. Make sure you have phone conversations with real people (realtor and mortgage company) so you fully understand all the details of your agreement. You need to understand the entire home purchase process before searching for properties. In addition it’s important to remember that all markets are different. What you read about a California housing market or loan program may not apply to Texas, etc.

Need to speak to a loan specialist? We are hear to help answer any questions you have about government home loans across the U.S. 7 days a week, please call or just submit the Quick Contact form on this page.

95% Jumbo ARM, Fixed Rate Phoenix, AZ

This page updated and accurate as of March 10, 2026 USDA MTG HUB

95% Jumbo loans are coming back in Phoenix through a select number of lenders and banks. 95% Jumbo ARM, Fixed Rate Phoenix, AZ: When you talk about jumbo mortgages, the loan amount the lender or bank lends is larger than the standard Conventional loan amount.

Jumbo loans exceed the maximum loan amounts established by Fannie Mae and Freddie Mac, which is typical $726,200 for most of the country.

Five Stars offers a number of financing options for jumbo loans in all 50 states, with as little as 5% down. In addition, we have options for no mortgage insurance (PMI) for borrowers with credit scores of 700 or higher. With a jumbo mortgage, buyers will receive great interest rates with a choice between fixed or adjustable rates terms. Our jumbo loans offer maximum flexibility for home financing for larger loans. There are a few options available for 95% jumbo financing in Phoenix, AZ. Below we will detail the requirements borrowers will want to be aware of.

First, it’s important to note the 5% down jumbo option is only available for primary & second homes. Single Family, Townhomes and condos. Applicants wishing to purchase an investment property should plan on a larger down payment of 15% minimum.
Borrowers will need stellar credit to be approved for the 95% program. Credit scores over 700 is one of the primary requirements.
The 95 percent Jumbo option is available in both a Fix rate term and Adjustable rate (ARM)
95% financing is available up to $2,000,000. Higher loan amounts are available to borrowers with 10% – 20% + down payment.
90% financing up to $3.0m.
Most options do not require monthly PMI.
Full documentation required – this includes proper income and asset documents.
The Jumbo programs are available for both regular home purchases and home refinancing in Arizona.
Loan pre-approvals are often completed in under 30 min.

Five Stars is proud to serve home buyers in Arizona and across the nation. Jumbo, Conventional, FHA, USDA and VA financing. Please learn more by visiting www.FiveStarsMortgage.com

FHA Loan Offers Great Alternative

This page updated and accurate as of March 10, 2026 USDA MTG HUB

Not everyone lives in a USDA Rural eligible location. For home buyers that reside in more populated cities, FHA can be a great alternative. The FHA loan can be especially good for first-time home buyers that need a mortgage that doesn’t require a large down payment. Although the FHA is not 100% financing like the USDA mortgage, it does offer some flexibility. Let’s discuss some FHA loan benefits below.

FHA loans only require a 3.5% down payment. The down payment money can come from a family member as a gift. In addition, borrowers can use approved down payment assistance funds, grants, etc.
FHA has closing costs similar to other loan programs. However, the FHA guidelines do permit the seller of the home to pay the home buyers closing costs – up to 6%. This is often more than enough to cover typical closing costs and escrow requirements.
FHA upfront mortgage insurance premium of 1.75% can be added to borrowers’ loan.
FHA loans have flexible terms – 15, 30 year fixed. Adjustable rates as well.
FHA loans do not have any early payoff penalties – Sell your home or pay off your loan whenever you like without penalty.
FHA upfront mortgage insurance premium of 1.75% can be added to the borrower’s loan.
FHA does not have any income limits or property location limits like USDA.
Borrowers can purchase any single-family home, townhome or FHA-approved condo that meets basic HUD requirements. The seller(s) of the home is not important.

In addition to the basic FHA loan, FHA also offers a HUD $100 down mortgage for specific HUD-owned homes. This is a great program in the fact that borrowers can purchase with very little money out of pocket. The only stipulation is the home must be HUD owned. Borrowers can check the HUD home list here.

Home buyer that have questions are encouraged to contact us at ph: 800-743-7556

Should You Put More Money Down On Mortgage If You Have the Option?

This page updated and accurate as of March 10, 2026 USDA MTG HUB

Almost every loan program requires some sort of a down payment. The exceptions are the VA loan and USDA programs which do not need a down payment. Your down payment is your initial ‘skin in the game’ so to speak.

Mortgage programs that do ask for a down payment issue minimum down payment guidelines. For example, the FHA loan asks for a down payment of 3.5 percent of the value of the property. Most conventional loans need a down payment of 5 percent. Most Jumbo mortgages ask for a down payment of at least 5-10 percent.

With a low down payment conventional loan however, private mortgage insurance will be required. To avoid private mortgage insurance borrowers will make a down payment of 20 percent. Private mortgage insurance, or PMI, is not necessarily a bad thing. In fact, it helps those get into a conventional loan without having to make a larger down payment. The question though is this: is it always best to make the minimum down payment or should you put more money down if you have the option?

For someone with the available cash on hand or who will have cash once an existing home is sold, it’s certainly something to consider. A larger down payment means a lower loan mortgage which in turn lowers the monthly payment. There are multiple factors to consider.

For example, take a couple that will soon retire. They want to keep their monthly expenses as low as possible to keep in line with their fixed income. A lower loan amount helps to accomplish that. Or perhaps someone wants a comfort zone with their monthly mortgage payment. By providing your loan officer with an amount you’re comfortable paying each month and applying current interest rates, a mortgage amount can be calculated. Putting more money down to reach that comfort level can be an option.

Another consideration is liquidity. Once a down payment is made and a mortgage issued, the equity in the property is no longer readily available for use. It’s in the home. Yes, one can get a home equity loan or a home equity line of credit, or HELOC, but it’s not like going to the bank and withdrawing the funds anytime you want. It can be an option however of making a large down payment and later taking out a HELOC and tapping into it as needed. It should also be noted that HELOCs can carry slightly higher rates compared to an existing mortgage.

A lower loan amount compared to the value of the property can also help someone qualify for a mortgage if they’re “almost there” in terms of getting approved for the selected mortgage.

Making a large down payment with existing funds can mean pulling cash out of an interest-bearing account. This might be as simple as a savings account but it can also mean pulling funds out of a retirement account that pays monthly dividends. This is a decision that needs to be made carefully and with the advice of a financial planner.

Paying down an existing mortgage later on won’t change the monthly payment if the loan is fixed. Adjustable-rate loans can result in a lower monthly payment. Your loan officer can help you with the math on this.

Finally, putting more money down than the mortgage program requires is a consequential financial decision. A large down payment is essentially tying up those funds in the home. Those same funds might better be used paying off existing debt such as student loans. Or finding a money market account or mutual fund that pays a steady return.

These financial decisions should be made together with your financial planner and loan officer. There are multiple considerations to be made, so don’t make these decisions without the advice of a professional.

Have questions? please contact us to learn more about any USDA, FHA or VA loan programs.

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Other Loan Programs

100% USDA RD Home Loan

VA Home Loans

FHA Home Loans